Common currency between Brazil and Argentina being worked on, says Lula

President Luiz Inácio Lula da Silva (PT) stated that the common currency project between Brazil and Argentina is being worked on by both countries. The statement was given after a meeting between Lula and the Argentine president, Alberto Fernández, in Buenos Aires this Monday (23).

“I think over time it [moeda comum] it will happen, and it needs to happen”, stated Lula.

The idea is that the “sur”, as it would be called, is a common currency for commercial transactions between countries. That is, it is not a single currency – Brazil and Argentina would follow with the real and the peso, respectively.

The Brazilian president says that the common currency project will be dealt with together with proposals for foreign trade and transactions made by the economic teams of Argentina and Brazil, after “many debates and meetings”.

“If it were up to me, we would always have foreign trade in other countries’ currencies, so that we don’t have to depend on the dollar. Why not try to create a common currency between the two countries, with Brics countries?”, said Lula .

The governments of Brazil and Argentina will also sign an agreement to finance Brazilian exports in operations with guarantees from the neighboring country with international liquidity, to try to rekindle trade between the two countries, a source in the Brazilian government who participated in the negotiations told Reuters. .

The agreement foresees the opening of credit from Brazilian banks to Argentine importers and the creation of a fund by the Brazilian government to guarantee the payment of loans.

In this operation, according to the source, the bank pays directly to the Brazilian exporter, with a guarantee from the National Treasury, while Brazil receives from Argentina the same amount, deposited in New York, of bonds with international liquidity.

As examples, the source cites Chinese bonds and gas purchase contracts, assets with international liquidity that guarantee Brazil’s access in the event of non-payment by the Argentine importer.

The entire operation, according to the source, would be done in reais.

The agreement also provides for the guarantee that Brazilian companies will be able to withdraw funds from Argentina without difficulties. With no foreign currency, the country has controlled the outflow of funds from foreign companies, which should no longer happen to Brazilian companies.

The agreement also provides for the organization of a working group to create, in the medium and long term, a single clearing account in South America along the same lines as the one negotiated now with Argentina, but more systematized and with a governance that authorizes the country’s access to resources if it meets certain rules, such as single-digit inflation and not being in default.

Brazil is proud to finance projects in Latin America, says Lula

Also this Monday, at the opening of a meeting between Brazilian and Argentine businessmen, Lula stated that the BNDES (National Bank for Economic and Social Development) will once again finance commercial relations between Brazil and projects abroad.

Earlier, the president had already stated that the financing of works in Latin America by the BNDES would be a “reason of pride” for Brazil, and that the country has a duty to help its neighbors.

He also said that if Brazilian businessmen show effort, the conditions for the creation of a gas pipeline between Brazil and Argentina could be created.

“I’m sure that Brazilian businessmen are interested in the gas pipeline, in the fertilizers that Argentina has, in Argentina’s scientific and technological knowledge. And if there is interest from businessmen and the government, and we have a development bank for that, let’s create the conditions to make the financing that we can do to help in the Argentine gas pipeline”, said Lula.

(With Reuters)